Star Alliance is not ruling out Virgin Blue

[Keith T 2]

http://www.theaustralian.news.com.au/story...4-23349,00.html

 

Star leaves door open for Virgin

 

Steve Creedy, Aviation writer

May 18, 2007

 

STAR Alliance has not ruled out reopening discussions with Virgin Blue about possible membership in its rapidly expanding airline grouping.

 

While Star believes member airlines such as Singapore Airlines, United Airlines and Air New Zealand give its customers good access to Australia, it has never filled the void left by the collapse of Ansett.

 

Star chief executive Jaan Albrecht said this week that unofficial discussions held with Virgin Blue about two years ago faltered when it became clear that Australia's second biggest carrier was oriented too much towards a low-cost market model.

 

"This made it difficult to establish connectivity, to establish code-shares, to establish airport through check-in possibilities because they did not have the technical capability for doing that," Mr Albrecht said.

 

"We know that Virgin Blue has made an evolution themselves. They have launched some of the products which are key to the network areas - and yes, perhaps in the future we might well have a look again at the synergies."

 

Star celebrated its 10th anniversary on Monday, with executives from the 17 member airlines discussing where it will go in its next decade.

 

It has 17 member airlines generating total revenue of $US114.6 billion ($139 billion) serving 155 countries and more than 850 airports. It now has more than 16,000 daily departures, with more than 405 million passengers flying annually on a fleet of 2777 aircraft.

 

The alliance's phenomenal growth is set to continue as Air China, Shanghai Airlines and Turkish Airlines come on stream. Mr Albrecht said executives meeting in Copenhagen had looked at what efforts should be made to continue to recruit members and how big it should be allowed to get.

 

"We had a good discussion about where would it make sense to grow, why should we grow, does growth come at a price and is this price deeper integration?" he said. "And basically the outcome was we need to continue focusing on quality but we need to be open to opportunities for growth."

 

The alliance boss said opportunities included Russia, India, Latin America and the Gulf states.

 

"Really what we want to do is give our customers - corporate accounts and individual customers - access to the Middle East," he said.

 

"So we are not using the Middle East as a hubbing concept but basically giving access to tourist or business attractions in all locations in the Middle East, which we are doing with Turkish Airlines."

 

In a speech given to mark the alliance's 10th anniversary, Mr Albrecht had earlier identified competition, technology and the environment as key challenges facing the airline industry. In terms of competition, he noted that almost two-thirds of the international airline industry was now organised in the three alliances and there was no sign the model was losing its strength.

 

"Even the other airline industry trend, consolidation, will not change that fact," he said. "Consolidation in my view will happen because it is inevitable. But consolidation will happen more on a regional scale, in the US, in Europe and later on, maybe, even in Asia.

 

"It will remain up to the strategic decision of our individual members if, when, and how to engage in deeper consolidation, and I am convinced we will see some of this happening in the not too distant future. So what we will see in the next 10 years is strong competition and regional consolidation with global alliance collaboration."

 

Mr Albrecht said the past decade had seen technological development accelerating in many areas directly or indirectly connected to the industry.

 

Aircraft manufacturers were rolling out planes with impressive improvements in operational capabilities and cost efficiencies, aircraft systems were becoming more reliable and maintenance-friendly, many airports were modernising their systems and processes, and there had been an unbelievable development in information technology.

 

Star had established a process to discuss common specifications for future aircraft, and airports were working with the alliance on new technologies such as biometrics to reduce the time passengers spent on the ground. Other challenges included governments that continued to burden "a fragile system" with additional taxes and fees while not doing their homework on providing a modern and efficient infrastructure on the ground and on the airways; regulatory restraints facing airlines; and tightened security requirements.

 

Mr Albrecht said Star would continue to promote an "aero-political" framework that allowed its members to compete in an open and fair market environment. It would also look at measures that limited the direct effect of increased security on travellers.

 

The industry also needed to address the environmental debate by putting the intense efforts of the aviation industry to tackle the problem "into the right perspective compared with the overall size of the matter".

 

"Our industry is doing far more than others to contribute to the responsible use of available resources and to strive for environmental sustainability," Mr Albrecht said.